SKF Half-Year Report 2014

“Sales overall developed in line with our expectations and excluding
one-offs we had a good cash flow from operations and we saw a good
sequential improvement in our operating margin and profit. While the
business mix remained somewhat negative the steps we are taking to
improve the price/mix gave positive results. Our cost reduction
programme is also delivering the expected results and additional
activities were announced in the quarter.

We continue to take steps to strengthen SKF and to support our long-term
targets. The new campus in Shanghai which hosts a new automotive
factory, Global Technical Centre, SKF Solution Factory and SKF College
was opened as was our new distribution centre also near Shanghai in the
new government free trade zone. These will enable us to better support
our customers in North East Asia, a region which is developing very well
for us. In addition, based on our increased investment in research and
development, a number of new products particularly focusing on energy
savings and improved operating performance were launched. We also gained
a number of important new businesses.

Kaydon is developing well both from a sales and profitability viewpoint
and the integration activities are going according to plan. The major
order which was gained from a North American wind energy customer for
business in both North America and Brazil is a great example of how the
combination of SKF and Kaydon can bring real value to our customers.

Looking forward and taking account of the continued uncertainty in the
global market place we expect that in the third quarter overall demand
for our products and services will stay on the same level.”

Key figures

Q2 2014

Q2 2013

YTD 2014

YTD 2013

Net sales, SEKm

17,955

16,392

34,689

31,544

Operating profit, SEKm

2,096

1,837

4,120

3,317

Operating margin, %

11.7

11.2

11.9

10.5

Operating margin excl. one-time items, %

12.3

12.4

11.9

11.9

Profit before taxes, SEKm

1,761

1,627

3,548

2,864

Net profit, SEKm

1,187

1,104

2,462

1,922

Basic earnings per share, SEK

2.54

2.36

5.26

4.1

The operating profit was affected by one-time costs in the second
quarter by around SEK 120 million (190) and in the half year by SEK 0
million (440). Additionally, the financial net in the second quarter and
half year were affected by one-time costs of around SEK 100 million.

Net sales change y-o-y, in SEK, attributable to:

Volume

Price/

Structure

Currency

Total

mix

effect

Q2 2014

3.60%

1.00%

3.80%

1.10%

9.50%

Half year 2014

5.00%

0.20%

4.20%

0.60%

10.00%

Sales in Q2 in local currency and excluding structure increased by 1% in
Europe, 3% in North America, 2% in Latin America, 14% in Asia and 14% in
Middle East and Africa.

Manufacturing in the second quarter was slightly higher compared to last
year.

Sales in the first half year in local currency and excluding structure
increased by 3% in Europe, 3% in North America, 1% in Latin America, 13%
in Asia and 18% in Middle East and Africa.

Manufacturing in the first half year was higher compared to last year.

Outlook for the third quarter of 2014

Demand compared to the third quarter 2013

The demand for SKF’s products and services is expected to be slightly
higher for the Group and North America, higher for Asia, relatively
unchanged for Europe and slightly lower for Latin America. It is
expected to be higher for Strategic Industries and relatively unchanged
for Regional Sales and Service and Automotive.

Demand compared to the second quarter 2014

The demand for SKF’s products and services is expected to be relatively
unchanged for the Group and Europe. It is expected to be slightly higher
for North America and Asia and slightly lower for Latin America. For
Strategic Industries it is expected to be slightly higher and for
Regional Sales and Service and Automotive it is expected to be
relatively unchanged.

Manufacturing

Manufacturing is expected to be slightly higher year over year and
relatively unchanged compared to the second quarter.

Gothenburg, 15 July 2014

Aktiebolaget SKF

(publ)

A teleconference will be held on 15 July at 08.30 CEST, 07.30 (UK):

SE: +46 (0)8 505 564 74

UK: +44 (0)203 364 5374

You will find all information regarding SKF Half-year results 2014 on
the IR website.

investors.skf.com/quarterlyreporting

AB SKF is required to disclose the information provided herein pursuant
to the Securities Markets Act and/or the Financial Instruments Trading
Act. The information was submitted for publication at around 08.00 on 15
July 2014.